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Salaries for people starting permanent jobs in Britain rose at the weakest pace in over two years in December, further clouding the outlook for the kind of wage growth needed to fuel Britain's economic recovery, a survey showed.

PHOTO: BLOOMBERG

[LONDON] Salaries for people starting permanent jobs in Britain rose at the weakest pace in over two years in December, further clouding the outlook for the kind of wage growth needed to fuel Britain's economic recovery, a survey showed.

The Recruitment and Employment Confederation's (REC) monthly measure of permanent starting salaries suffered its sharpest slowdown since late 2011 and touched its lowest level since October 2013.

Britain has been among the fastest-growing rich economies over the past couple of years, and its unemployment rate has fallen its level before the financial crisis. But growth has relied largely on spending by consumers, helped by near-zero levels of inflation.

Bank of England policymakers want to see stronger wage growth, among other factors, before it raises interest rates from record low levels. But official average monthly earnings figures in recent months have been weaker than expected.

Despite recent falls, most of the survey's measures still stand at historically high levels and REC described the labour market overall as in "great shape" at the start of 2016.

But it predicted businesses will link annual pay awards with low levels of inflation, meaning wage growth will likely stay between 1.5 and 2.5 percent in 2016, short of forecasts for wage growth comfortably above 3 percent from the Bank of England and the government's budget office. "The other bump on the road for business is the European Union referendum, which is likely to create uncertainty which could lead to a reduction in hiring," REC chief executive Kevin Green said.

Prime Minister David Cameron is negotiating with European Union partners for reforms of the bloc ahead of a referendum that could be held as early as June.